UOB starts consent solicitation exercise to facilitate transition to Sonia from Libor

UOB on Tuesday said it commenced a consent solicitation process to seek approval to modify the terms and conditions of the bank's £350 million (S$656 million) floating rate covered bonds due 2023.

This is to facilitate a transition in the interest basis from Sterling Libor (London Interbank Offered Rate) to Sterling Overnight Index Average (Sonia), UOB said in a bourse filing.

It will convene a videoconference meeting for eligible bondholders at 5pm Singapore time on June 30 to seek approval via an extraordinary resolution. Credit Suisse Securities (Europe) and HSBC have been appointed as solicitation agents.

To implement the change in the interest basis, the rate of interest for the covered bonds will continue to be a floating rate and will be "compounded daily Sonia" plus an adjusted margin to be specified in the amended and restated pricing supplement.

The adjusted margin will be the sum of the Sterling Libor versus the Sonia interpolated basis, the covered bonds' current margin of 0.24 per cent, as well as a forward adjustment spread to be determined by Credit Suisse and HSBC, subject to a minimum of zero per cent.

UOB shares were trading S$0.04 or 0.2 per cent higher at S$26.31 as at 10.21am on Tuesday.